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6th Jun 2017
More than 7.5m people have now been automatically enrolled into a pension scheme since the end of 2012. By the end of 2018 this will rise to 10m and by 2020 the total additional money in workplace pensions will amount to £17bn. Opt-outs have been lower than expected at 10% but we are now entering the first phase of re-enrolment and in the coming years contributions will automatically increase.
Some workers may acquire the savings habit over the coming years and, so long as an annual statement doesn’t alter this inertia, then all’s well – or perhaps not. Even at 8% (of salary) contribution rate in 2019 this won’t be good enough for a decent retirement.
Whether prompted by annual statements, the Pensions Dashboard or increasing deductions from pay, workers are going to be asking more questions about their pension. Trustees and other governing bodies will also want to communicate to members the benefits of their accumulating funds (and encourage increasing momentum).
Below are our thoughts on what workers are likely to be asking. And in the digital world, we can expect them to be asking the question at any time looking for instant answers through their phones or computers.
Questions - from new entrants
Staff turnover will generate a substantial flow of new entrants each year. Each time, more people will be asking “what is the value of joining” questions: -
Questions - as time goes by
Whilst pension money has been building up, there are concerns about paying off student debt, buying a house and bringing up a family. This increases pressure to revaluate a pension. Same questions as a new entrant, but also time to stop and think: -
Questions - about getting an income
With money accumulated, workers will get to the point when they can consider using their pension for income. A time of heightened awareness: -